In What Order Are Financial Statements Generally Prepared

question 91

Multiple Choice

In what order are financial statements generally prepared?

• A)balance sheet, income statement, and statement of retained earnings
• B)statement of retained earnings, balance sheet, and income statement
• C)income statement, balance sheet, and statement of retained earnings
• D)income statement, statement of retained earnings, and balance sheet

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Definitions:

Statement of Cash Flows

A financial report that depicts how variations in income and balance sheet accounts affect the cash and cash equivalents, organized into the segments of operating activities, investing activities, and financing activities.

Operating Activities

Activities that relate to the primary operations of a company, such as sales, provision of services, and production.

Indirect Method

This approach is used in cash flow statements to report net income and adjust it for changes in assets and liabilities that affect cash but are not cash transactions themselves.

Depreciated Equipment

Assets that have undergone depreciation to reflect the reduction in value due to wear and tear, age, or obsolescence.